The Pirates of Prime Time

Michelle Chaplin can't get enough Sex and the City. She has seen virtually all 66 episodes of the series--some of them, like the one in which Samantha tries to seduce a priest, repeatedly. But unlike most people, who pay an extra $13 a month on their cable bills to get HBO, which carries the show (and is owned by TIME's parent company AOL Time Warner), Chaplin gets her Sex and the City free. Using a program called Morpheus, she goes online and downloads any episode she wants in as little as 10 minutes. Then she watches her haul on the computer. "I know it's not legal," the college sophomore says, "but it's easier for me to download than it is to get HBO or cable."

People like Chaplin pose an increasingly worrisome problem for the $80 billion television industry. Just ask anyone who works in the music business, which in 1999 was upended by a free music service called Napster that made music swapping easy online. While Napster was subsequently hobbled by lawsuits, it pried open a Pandora's jewel box: Last year CD sales declined for the first time in a decade. Now, with the proliferation of a new generation of "file sharing" programs such as Morpheus, people are swapping TV shows and movies along with their music--more than 11 million Americans do it. And since the current programs, unlike Napster, are decentralized, it's much harder to shut them down.

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In TV Land, the swapping comes on top of another, potentially bigger threat. While college kids and geeks are swapping comedies and cartoons online via PCs, a controversial new device called ReplayTV 4000--think of a supersmart VCR--lets regular nontechie folks save television shows in pristine digital format directly from their TV, then watch them commercial free and send them over the Net to other Replay users. Hackers have even figured out ways to copy Replay files to their personal computers, where the files can be uploaded by users of Morpheus and similar programs for wider dissemination.

Hollywood is not amused, and has filed two lawsuits: one against the makers of Replay, the other against the creators of Morpheus and two similar file-sharing services called Grokster and Kazaa. While it may be O.K. to copy a show for yourself on the VCR, "it's not O.K. to start sending it around and file sharing," warns Jack Valenti, CEO of the Motion Picture Association of America. The first legal face-off begins March 4 with a hearing on the Morpheus case in federal district court in Los Angeles. The Replay trial is scheduled for August.

While the legal battles drag out in court, pirates are enjoying a virtual free-for-all. Necratog (who asked to be identified by his screen name only) is the first link in a chain that supplies digitized copies of Buffy the Vampire Slayer to an online chat room and a website that get as many as 1,500 downloads a week. Not to be confused with the many "leechers" (people who only download shows), he's a "capper" (someone who captures a TV show, digitizes it and sends it out to others).

His PC is connected to a TV cable; an inexpensive video card allows him to watch TV on his monitor. Using a free application called VirtualDub, he digitizes any show he wants and saves it to his hard drive. He then spends about five minutes editing out the commercials and an hour compressing the file until it is small enough to swap online. Then he uploads it to a friend who makes it available for others to download.

Like many other TV freaks, Necratog, 21, also downloads favorite programs and burns them onto CDs. His archives include 400 CDs that hold more than a thousand Buffy, Babylon 5, South Park and Star Trek shows. But Buffy is his favorite. "I'll watch the same episode three or four times in a row," he says. "I've watched some over 20 times altogether."

In Napster's heyday, pirated TV shows were a rarity on the Net. But that changed with the advent of broadband home connections, $40 TV tuner cards that snap into your PC and cheap ways to store data. Looking for episodes of Friends? The MPAA counted more than 5,000 locations on the Internet last year where people could download episodes for free. Using custom software to track copyright violations, it also found 4,000 sites for The Simpsons and 2,000 for The Sopranos. Big Pussy is not going to like that!

The biggest threat to Hollywood may not come from the geeks but from so-called personal video recorders. Like its competitor TiVo, which has sold some 400,000 units to date, the newer Replay which has sold only 5,000, gives owners an easy, menu-driven way to search for shows to record onto its hard drive. The reason Sonicblue got sued is that the new Replay 4000, which hit the market in late November and sold out before Christmas, automatically fast-forwards shows past commercials and lets broadband users send them to friends over the Internet. (TiVos do not offer these features.) An independent site called Planet Replay even helps match up people who want to trade shows.

For now, though, Replay-to-Replay show swapping is painfully slow. Software engineer Thomas Wagner, 32, who has three Replay boxes at home, says it took him eight hours to get a half-hour episode of the now defunct show The Tick from another user, even though he has a high-speed cable modem. But he figures all that will change as the technology improves.